How to Fight Debt at the Source

Debt is not an abstract concept. Rather, people accrue debt for a reason. It  might be to pay for medical bills, or to attend college, or to start a small business. Yet, because so many people struggle with debt, it can be easy to forget how debt occurs in the first place. To that end, today we’re going to focus on common sources of debt. We’ll explain what causes debt, what individuals can do to prevent taking on debt, and how they can get out of debt quickly.

Good vs Bad Debt

Having debt isn’t always a bad thing. In fact, paying off a loan successfully can boost your credit score significantly. The difference between good and bad debt is simply your ability to pay it off. If you’re capable of paying off a debt quickly, then it won’t present much of a problem. In general, avoid taking on debt that you’ll struggle to pay off in the future.

Preventative Measures

Of course, some debt is unavoidable. After all, if you get sick, you have to  visit a doctor. And that costs money. Still, it’s possible to take preventative action now to lower your chances of going into debt later. For instance, you could visit an STD screening center and thus address a medical issue with a minor investment before it becomes a major problem. This is obviously good for your health, but it’s also beneficial for your financial standing as well.

Mitigate Against Debt

Again, while certain debts may be unavoidable, they can be delayed and mitigated against. Let’s consider another example: education. Almost everyone has to take out some sort of loan to attend college. Savvy individuals can ease their financial burden in the future by going to a community college for a year and then enrolling in a more traditional university. It’s a simple concept, but a powerful one: the less debt you take on, the sooner you’ll be able to pay it off.

Change Your Lifestyle

No one should ever get comfortable living with debt. The longer you let a  debt exist, the more it will cost you. As such, it’s imperative to do everything you can to eliminate any debt you have as fast as possible. This may mean that you need to alter your lifestyle in the interim. While it would obviously be disappointing to go without certain creature comforts, your first priority should be to balance your accounts. Once you’re in a healthy financial position, you can then start to indulge a bit more. Trust us, it’s preferable to filing for bankruptcy!

Ding. Dong. The witch is dead.

Yo yo yo! Quite possibly the most exciting announcement EVER . You’re probably going to want to take a seat before you read this. Are you sitting down yet? Okay good.

Today, mi amigos, I would like you all to know, I just popped a cap in Sallie Mae’s a$$ and laid her to rest. FOR GOOD!!!! That’s right PF’ers I am debt free! I feel so many things right now, but mostly I’m just turned on. What can I say? Being debt free is sexy. Ahhh, it feels so good to say, I think I might just say it again… I’M DEBT FREE!!!! Okay, now that I’m done gloating, let’s take a little walk down memory lane…

I graduated college Spring 2007 with $28,462.96 of student loan debt. I did the typical post-grad choice and deferred my payments for the six months allotted. I then consolidated my student loans with Sallie Mae, which in hindsight was the biggest financial mistake of my life. In February 2008, I had to make my first student loan payment. A whopping $178. I did this one time. After the first month, I decided I didn’t want to be in debt for the next 20 years, so I stepped my game up. I began doubling my monthly payments and figured I’d be out of debt some time in 2017. I thought I was pretty smart.

I continued making these double payments for exactly one year. In March 2009, it was time to get even more serious. I began throwing between $1,000 and $1,500 towards my loan every single month. Although I was committed to paying off my loan quickly, I still lacked the intensity needed to really get the ball rolling.

In April 2010, that changed. I became determined to be debt free by my wedding day. This is when I made a $10,000 decision and reduced my loan from $14K to $4K. After some more number crunching, excel spreadsheeting, and mathematical calculating I realized it was time to say goodbye to Sallie Mae for good. Over the weekend I submitted my final payment, and in case I haven’t already told you, today marks my first day of debt freedom!!! Kind of.

Apparently I made a mistake in predicting the accrued interest over the few days it would take my payment to process. Come to find out, my calculation was off by eleven cents…

So over the 2.5 years it took me to pay back my loan, I ended up forking over $3,832 in interest. This brings my total repayment to $32,295. While that number might be painful, it’s a whole heck of a lot better than the $52,000 total I would have paid had I taken the full 20 years to pay it back. Boo to the Ya for saving money.

I can tell you right now, I am already benefiting from the psychological effects of debt freedom. I feel incredible and am so excited to be able to spend my money without a voice in the back of my head saying “You shoulda used that money towards your debt.” Sallie Mae is one woman I never want in my life again. Ever.

As if you couldn’t tell, I am  really excited about this. Let me just get it out of my system one last time. HELL YEA!!! I’m Mother Effin, Debt to the Free. It’s time to go play “Ain’t gonna tie me down” over and over again, cause as of today, I am no longer Sallie Mae’s biotch.

Any suggestions for what I need to call my blog now? Perhaps, Punch Making Really Dumb Financial Decisions In The Face?